Tài chính doanh nghiệp - Chapter 6: Financial planning: short term and long term

Chapter 6FINANCIAL PLANNING: SHORT TERM AND LONG TERM1© 2012 South-Western Cengage LearningENTREPRENEURIAL FINANCE Leach & MelicherCHAPTER 6:Learning ObjectivesConstruct a cash budgetDescribe how projected statements of cash flow relate to cash budgetsExplain why projected statements of cash flow are important to the entrepreneurUnderstand the concept of a sustainable sales growthUnderstand the process of identifying the quantity and timing of additional funds needed to support the venture’s sales forecastsConnect sales growth rates to the amount and timing of additional funds neededDescribe the percent-of-sales method for preparing financial plans23Venture Life Cycle: Operating And Financial DecisionsDevelopment Stage:Screen Business IdeasPrepare Business PlanObtain Seed FinancingStartup Stage:Choose Organizational FormPrepare Initial Financial StatementsObtain First Round Financing4Venture Life Cycle: Operating And Financial DecisionsSurvival Stage:Monitor Financial PerformanceProject Cash NeedsObtain First Round FinancingPossible Actions: Liquidate v. RestructureRapid Growth Stage:Create and Build ValueObtain Additional FinancingExamine Exit OpportunitiesPossible Actions: Go Public v. Sell/Merge5Venture Life Cycle: Operating And Financial DecisionsEarly-Maturity Stage:Manage Ongoing OperationsMaintain and Add ValueObtain Seasoned Financing 6Short-term Cash Planning ToolsSales SchedulePurchase ScheduleWages and Commission ScheduleCash Budget7PDC Company Operating & Cash Budget8PDC Company Operating & Cash Budget9PDC Company Operating & Cash Budget1011Check With Projected FinancialsAs a check on the cash budget, you can get the exact same cash balance by constructing a full set of financial statements. See Exhibits 6.3 – 6.5 in the textbook.12Forecasting Sales Or RevenuesForecasting for Early Stage Ventures (firms that are in eithertheir development, startup, or survival stage, or just enteringinto their rapid growth stage of their life cycle) Industry Probability of Sales ComponentsSales Scenario Occurrence Growth Rate to Sum Optimistic forecast .30 X 60% = 18.0%Most likely forecast .40 X 50% = 20.0%Pessimistic forecast .30 X 40% = 12.0% 1.00 Expected Value = 50.0% 13Estimating Sustainable Sales Growth RatesInternally Generated Funds: Net income or profits after taxes earned over an accounting periodSustainable Sales Growth Rate: Rate at which a firm can grow sales based on the retention of profits in the business14Estimating Sustainable Sales Growth Rates15Estimating Sustainable Sales Growth Rates16Estimating Sustainable Sales Growth Rates17Estimating Additional Financing Needed To Support GrowthFinancing Capital Needed (FCN): financial funds needed to acquire assets necessary to support a firm’s sales growthSpontaneously Generated Funds: increases in accounts payables and accruals (wages and taxes) that occur with a sales increase18Estimating Additional Funds Needed To Support GrowthAdditional Funds Needed (AFN): gap remaining between the financial capital needed and that funded by spontaneously generated funds and retained earnings, or,AFN = Required Increase in Assets – Spontaneously Generated Funds – Increase in Retained Earnings19AFN Equation20AFN CalculationsSales last year = $1,600,000Asset investment = $1,000,000Net Income = $160,000Current Assets = $520,000Fixed Assets = $480,000Accounts Payable = $48,000Accrued Liabilities = $32,000Projected next year sales = $2,080,00021AFN Calculations22Projecting Or Forecasting Financial StatementsPercent of Sales Method: make projections based on the assumption that certain costs and selected balance sheet items are best expressed as a percentage of salesConstant Ratio Method: variant of the percent of sales method that projects selected cost and balance items at the same growth rate as sales23Projecting Or Forecasting Financial StatementsFinancial Forecasting Process To Project Financial Statements 1. Forecast sales 2. Project income statement 3. Project balance sheet 4. Project statement of cash flows24Game Toy Income Statements(2010 Actual, 2011 Projected)25Game Toy Balance Sheets(2010 Actual, 2011 Projected)26Game Toy Statements of Cash Flow(Projected 2011)27